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Lara v. Hyundai Motor America

May 29, 2002

ROSARIO LARA, PLAINTIFF-APPELLANT,
v.
HYUNDAI MOTOR AMERICA, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Winnebago County. No. 00--AR--202 Honorable Timothy R. Gill, Judge, Presiding.

The opinion of the court was delivered by: Justice Byrne

UNPUBLISHED

Plaintiff, Rosario Lara, filed a two-count complaint alleging that defendant, Hyundai Motor America, breached a written limited warranty (count I) and the implied warranty of merchantability (count II) under the Magnuson-Moss Warranty--Federal Trade Commission Improvement Act (Act) (15 U.S.C. §2301 et seq. (1994)). The trial court granted defendant partial summary judgment on count I. Plaintiff appeals the judgment and contends that the Act permits recovery for a breach of an express limited warranty even if the consumer cannot return the warranted product. Although the parties focus on the federal minimum standards of full warranties under the Act, we conclude that those standards do not apply. After considering plaintiff's potential remedies under Illinois' version of the Uniform Commercial Code (UCC) (810 ILCS 5/1--101 et seq. (West 1998)), we reverse the judgment and remand the cause for further proceedings.

FACTS

The following facts are essentially undisputed. On May 31, 1997, plaintiff purchased a new 1997 Hyundai Tiburon from defendant's dealer, Rock River Hyundai, Inc., for $13,011, and she financed the purchase through Ford Motor Credit Company. At the time of the sale, plaintiff received an owner's handbook, which is 38 half-pages. Pages 13 through 37 of the handbook contain a 3-year or 36,000-mile, bumper-to-bumper "New Vehicle Limited Warranty," which provides in relevant part:

"Warrantor

Hyundai Motor America (HMA) warrants your new 1997 Hyundai vehicle pursuant to the limited warranties described in this handbook. All warranty coverages indicated in this Owner's Handbook apply to the vehicle regardless of a change in ownership and are transferable to subsequent owners.

What is Covered

Repair or replacement of any component originally manufactured or installed by Hyundai Motor Company or Hyundai Motor America (HMA) that is found to be defective in material or workmanship under normal use and maintenance, except any item specifically referred to in the section 'What is Not Covered.' *** What is Not Covered

*** INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION, LOSS OF TIME, INCONVENIENCE, LOSS OF USE OF THE VEHICLE OR COMMERCIAL LOSS.

The duration of any implied warranties, including those of MERCHANTABILITY and FITNESS FOR A PARTICULAR PURPOSE, are limited to the duration of this limited warranty.

Some states do not allow limitations on how long an implied warranty lasts, or the exclusion or limitation of incidental or consequential damages, so the limitations or exclusions set forth regarding this limited warranty may not apply to you. You may also have other rights which vary from state to state."

From August 1997 through June 1999, plaintiff tendered the vehicle to the dealer 14 times to repair the clutch, the fuel and emission systems, the transmission, the blower, and the engine. Plaintiff asserts that the dealer's repair attempts were unsuccessful and that she could not have discovered the defects through reasonable inspection at the time of purchase. On August 26, 1999, plaintiff notified defendant in writing that she wished to revoke her acceptance. Plaintiff offered to return the vehicle in exchange for a replacement or full refund, but defendant rejected the proposal. The car was repossessed on September 3, 1999, for plaintiff's failure to make timely payments, and it was later resold at auction for $5,250.

On September 13, 1999, plaintiff filed her complaint in the circuit court of Cook County. The complaint alleges that plaintiff revoked her acceptance when she offered to return the vehicle. Plaintiff further alleges causes of action under the Act for breaches of the express new vehicle limited warranty and the implied warranty of merchantability. Plaintiff seeks several remedies for each breach, including (1) the difference between the value of the car as accepted and as warranted; (2) a refund of the full purchase price plus "all incidental and consequential damages"; (3) reimbursement for "all collateral charges," including insurance costs, costs of cover and replacement transportation, loss of income while repairs were attempted, and damages for "severe aggravation and inconvenience"; (4) reasonable attorney fees; and (5) prejudgment interest.

The case was transferred to Winnebago County, and on September 18, 2000, a panel of arbitrators found for plaintiff on the express warranty count and for defendant on the implied warranty count. Plaintiff was awarded $3,500 in damages, $12,415 for attorney fees, and unspecified costs. Defendant rejected the arbitration award and filed a motion for summary judgment, arguing that plaintiff's claims under the Act are barred because (1) she cannot return the vehicle, (2) the vehicle was merchantable because it was resold successfully, (3) the implied warranty of merchantability did not arise as a matter of law, and (4) the limited warranty disclaimed liability for the incidental and consequential damages that plaintiff alleged. In support, defendant cited an unrelated and unpublished appellate court order and challenged the constitutionality of Supreme Court Rule 23(e) (166 Ill. 2d R. 23(e)), which prohibits such citation.

On February 15, 2001, the trial court granted defendant summary judgment on the express warranty count (count I), denied it on the implied warranty count (count II), and rejected defendant's contention that Rule 23(e) is unconstitutional. The court found no just reason to delay the enforcement or appeal of the judgment under Supreme Court ...


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